Telecoms.com

interview

Northern Lights

In December 2009, TeliaSonera, the joint venture between the incumbent carriers of Sweden and Finland, became the first operator to launch a commercial LTE service. Håkan Dahlström, president of mobility services at TeliaSonera talks to Mike Hibberd about the motivation behind the move, the firm’s experiences with the technology so far and its plans for the future.

The Nordic markets have a pioneering pedigree. NMT, the first cellular network system that enabled roaming across national boundaries was built there. And the first GSM phone call was initiated in the region, which is home to some of the most prominent and groundbreaking manufacturers the industry has seen. It could never be said that the industry was born in one place or another, but it’s certainly true that many of its key developmental steps took place in these Northern European markets.

Over the years, though, the geographic focus has shifted as the industry has evolved. For the most technologically advanced markets, many now look to Asia, where from where a new breed of vendor also hails. The lust for growth has made stars of populous emerging territories, while the power in the wider industry is shifting to US-based internet firms and handset and software developers.

But TeliaSonera’s launch of two metropolitan LTE networks, in Stockholm and Oslo, propelled the region back into the industry spotlight in December 2009. These were the first networks built on the new standard to enter commercial service, some years before the majority of leading operators are expected to introduce the technology.

Not that the launches were full-scale, of course; nor were they intended to be. The firm took delivery of only a few thousand of the Samsung single mode modems for the initial phase of the service, after all, which rules out a capacity crunch as the driver for the early move to LTE. And with HSPA+ still providing plenty of headroom, TeliaSonera was not motivated by the evolutionary dead end that will see US vendors like Verizon among the first carriers in the world to look to LTE.

Instead, says Håkan Dahlström, president of mobility services at TeliaSonera, and responsible for the firm’s mobile operations in the Nordic and Baltic regions and Spain, TeliaSonera stole a march on the rest of the industry purely to prove technological prowess to its customers. “LTE gives us the opportunity to give our customers high quality access and to really prove to our customers that going with TeliaSonera is a future-proven choice,” he says.

You can’t showcase something that people can’t see, so TeliaSonera all but gave away the modems and the first six months’ service for free to attract early adopters. But the prices are set to rise soon to a level more commensurate with the service that’s being delivered. Users in Sweden will be charged a monthly subscription of SEK599 (€62.27) for the data-only service. And that’s quite a jump.

Dahlström doesn’t believe it is excessive, though. “For this marvellous service, this is still a very good bargain,” he says. “It’s SEK300 more for the 4G service than the 3G service and that gets you much higher access speeds and much lower latency. The latency is just as important as the throughput speed because we all hate waiting,” he says.

So exactly what kind of service will that SEK599 be buying? Dahlström concedes that current performance is not necessarily a perfect means of predicting speeds from loaded networks in the future but argues that all the signs are positive. “”Since it’s a shared medium, performance depends on what’s around you,” he says. “In Stockholm we have a few hundred base stations and, if you take the average in that network, the user is getting 20 – 40Mbps today. Some customers are experiencing speeds up to 80Mbps. But we’re still in the initial phase of the network build-out. “

Dahlström says that he sees unchecked thirst for bandwidth in his markets and elsewhere, which means that LTE in itself is unlikely to address the capacity crunch driving some operators to deployment. This is an increasingly prevalent view throughout the industry and is largely responsible for the realisation that flat rate pricing is an unsustainable model. It is widely held that LTE will usher in a new era of dynamic, tiered pricing strategies but Dahlström says that TeliaSonera has already set off on this path.

“Flat rate is not the way forward,” he says. “Already with 3G we are differentiating the prices based on the speed of the access we provide to the customer and the volume that they consumer. That’s something that we’ll continue with and my understanding is that we have acceptance in the market for this. On 3G networks you get average speeds around 6Mbps. If they’re getting ten times that, then I think that customers understand they should pay a premium,” he says.

In Sweden a government sponsored portal allows users of fixed and mobile broadband services to get a real world assessment of the speeds they are receiving from their service providers. It’s a popular site with users, who have become accustomed to holding their service providers to account, says Dahlström. He is hoping that users of the LTE service will use this portal to verify the high speeds afforded by the service and that TeliaSonera will prove more attractive and more sticky to customers as a result.

At this early stage, Dahlström says, it is difficult to derive any meaningful data on consumer behaviour in an LTE world. It has yet to become a mass market service and when it does the user profile will probably evolve. Technically, though, he claims that: “It’s been no more complicated adding 4G than it was adding 3G, although there’s still a long way to go before we can say that the 4G network is integrated in our mobile infrastructure in the same way as the 3G network is.”

Among the technical challenges that TeliaSonera has yet to solve is handover between LTE and the 3G network. This has not been an issue so far, given that the modems available on the new network have been single mode. But the firm is expecting to take delivery of dual mode 3G and 4G modems before the end of the second quarter, with the equipment arriving in large volumes during Q3. So there will soon be a greater urgency to enable handover.

However, with dongle-enabled laptops, usage is nomadic rather than mobile, leading Dahlström to judge handover as “not mission-critical”. He says the firm has a timeframe for introducing handover into the network, but will not be drawn on what that timeframe is.

It is not currently popular among mobile operators to focus on providing transport more than on the carrier’s role as a brand and developer and provider of a consumer facing portfolio of services and applications. So it is revealing when Dahlström describes TeliaSonera’s LTE network as a “killer application”.

People are addicted to the internet, he says, and improving their access to it is among the stickiest services a carrier can provide. “We see unlimited demand for bandwidth for our customers and it becomes more and more important for them how they access the internet and use data services,” he says. “We are a telecom operator and our ambition will always be to be a telecom operator. Access is our core business and we see that LTE gives us the opportunity to give our customers access of the highest quality.”

While starting in the major metropolitan areas will be a strategy almost universally embraced by carriers for LTE deployment but users outside of those centres still need to be provided with services that will enable operators to retain their custom. TeliaSonera has advanced plans for the expansion of LTE coverage in the two countries where it has launched so far. “During this year we will roll out to the 25 largest cities in Sweden and the four largest cities in Norway, including Oslo,” says Dahlström. “So by the end of the year quite a big portion of the population will be able to use this service in both Norway and Sweden.” The firm has not yet publicised plans to deploy LTE in any of its other markets.

Pioneering can be a lonely business and being the first in any technical evolution can, in hindsight, provide significant learning benefits to competitors who follow in your footsteps. So it remains to be seen just how much LTE will benefit TeliaSonera in the ongoing battle for customer retention. But the firm’s rollout does demonstrate at least that the technology works at launch, which could not be said for 3G services when they were initially deployed.

Dahlström remains convinced, however, that his firm’s success in stealing a march on its competitors, and in so doing planting the Nordic flag in LTE territory, will prove to be a winning decision. “For us 4G is an excellent opportunity to help our customers enjoy different kinds of entertainment and services as consumers and to improve their way of working and increase their efficiencies in their professional lives,” he says. “The LTE launch was a milestone for us; we have shown the market that we have leadership in this part of the world and we will keep it.”

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